Managerial Economics for M.B.A.’s
Longwood University
Fall 2014
Professor:
Prof. e-mail:
Prof. phone:
Section:
Classroom:
Office hours:
Office:
Texts:
Dr. Scott Wentland
wentlandsa@longwood.edu
419-346-2372 (mobile)
ECON 509 – 01
Online
Wednesdays, 11:00 a.m. – 2:30 p.m. ; 3:45 p.m. – 5:15 p.m.
Tuesdays and Thursdays, by appointment
Hiner 208
Froeb, Luke M. and Brian T. McCann (2010). Managerial Economics: A Problem
Solving Approach. South-Western, Cengage Learning.
Dixit, Avinash K. and Barry J. Nalebuff (1993). Thinking Strategically: The
Competitive Edge in Business, Politics, and Everyday Life. W. W. Norton &
Company.
Levitt, Steven D. and Stephen J. Dubner (2006). Freakonomics [Revised and
Expanded]: A Rogue Economist Explores the Hidden Side of Everything. Harper
Collins Publishers.
Course Introduction
This course will equip the student with the ability to properly frame any decisions
(business or personal) in an economic context, and then arrive at the best solution given the
information available. To do so requires two additional skills: 1) To accurately work with data to
assess the economic environment, 2) The ability to think strategically. Students will learn
managerial economics from a practical, problems-based approach, where economic theory will
be used primarily as a tool to solve today’s most common business challenges. Among others,
topics will include: profit maximization, demand analysis, elasticity, market power, regression
analysis, game theory, and pricing strategies.
Course Objectives
MBA students will learn economics relevant for managerial decision-making in business.
In this course, students will 1) develop microeconomic tools (including price theory, marginal
analysis, and market equilibrium dynamics) 2) learn and apply game theory and strategy and 3)
learn and use econometric and data analysis methods. Proficiencies in these areas will not only
build a sound foundation for MBA coursework, but will provide practical applications to
business problems and, ideally, yield a competitive edge in tomorrow’s business environment.
Catalog Course Description
The course will equip the student with the ability to properly frame any decisions faced (business
or personal), and then arrive at the best solution given the information available. To do so
requires two additional skills: 1) To accurately work with data to assess the economic
environment, 2) The ability to think strategically. Topics include: profit maximization, demand
analysis, elasticity, market power, regression analysis, game theory, and pricing strategies. 3
credits.
Grades
A
B
C
F
≥
≥
≥
<
90
80
60
60
General format for the course:
Because this is a three credit-hour course, students should expect approximately 2.5 hours
of “class time” each week along with several hours (depending on the pace of the individual
student) of reading and homework each week. The class time will be split among lecture,
discussion, and online content. As much as couple hours each week may be devoted to online
lectures, linked through Canvas. Then, beginning in week four, students will participate in
discussion sessions where we go over the previous week’s homework problems and additional
problems will be discussed (see below). These discussion sessions will last approximately 45
minutes (but some may last as long as 1.5 hours, depending on the volume of student
questions/comments and the nature of the material we cover in a particular week).
Grading Breakdown
Microeconomics Review Exam
Midterm Exam
Final Exam
Blogging Exercises
Group Wiki
Participation in HW Problem Sessions
Homework Assignments
TOTAL
50 points
250 points
250 points
75 points
75 points
100 points
200 points
1000 points
Exams
There will be two primary exams, which together make up exactly half of your total
grade in the course. The midterm will take place in the middle of the semester and will cover all
material up to week seven (except for the microeconomics review exam material). The final
exam will take place near the end of final exam week (Dec. 11) and will not be cumulative. It
will follow the same general format as the midterm exam, which include a combination of
multiple choice, short answer, essay, and numerical problems.
The microeconomics exam will be taken at the end of the second week of the course,
which will cover one week’s review material over undergraduate microeconomic topics. The
purpose of this exam (and the week’s review) is to bring students up to speed with
microeconomic principles that most students will have already had during their undergraduate
days. However, not all students will have the same background. Some students may not have
taken microeconomics as an undergraduate and others may be far removed from the material.
Ideally, this review will help put everyone on the same page and facilitate the transition to more
advanced topics.
Blogging Exercises
Students will participate in three blogging exercises, worth 25 points each. These
exercises are designed to get each student thinking about how the material we learn in class
applies to real-life examples and, ideally, generate discussion among students. Each exercise will
be distinct, but may contain some similar elements. For example, each exercise will consist of
more than one step, usually an initial step creating a unique entry, and then a comment or two on
other postings according to guidelines set by the instructor. Blogging exercises will be graded
based on the quality and quantity of the entries/comments. Each assignment will have more
specific criteria outlined in the module on Canvas along with a rubric for that particular
assignment on how it will be graded.
Group Wiki
There will be one short group assignment, which will involve collaborating among a predetermined group (chosen by your instructor) using a Wiki on Canvas. The project will be based
on the research that eventually would become Freaknomics. Each group will read one or two
(depending on the class size and number of groups) of Steven Levitt’s academic journal articles
that are summarized in Freakonomics. Groups will first create a short summary of the relevant
Freakonomics chapter, highlighting the problems Levitt is trying to solve and the main
takeaways from the chapter. Then, groups will dig a little deeper than the book and summarize
how Levitt uses data to solve such problems, describing the data he uses and his research design.
The wiki entry will conclude with interesting results from the original articles that did not make
it into the Freakonomics book itself. More in depth details about the assignment will be provided
later in the semester.
Homework Assignments
The principle textbook for this course has the subtitle of “A Problem Solving Approach,”
suggesting that evaluating problems will be a key component of this course. Most weeks will
entail a homework assignment, which will consist of homework problems from the end of each
chapter and/or additional problems given by the instructor. There will be 11 homework
assignments, worth 20 points each (and the lowest score will be dropped, leaving 10 in total).
The assignments are designed to help students stay on pace with the lectures and
readings. Perhaps more importantly, the assignments will provide students with continuous
feedback about how they are grasping the material on a weekly basis. Moreover, it will ensure
more informed and richer discussion during the live sessions (see below).
All assignments will have designated areas for submission on Canvas. Please send me an
e-mail as soon as possible if you are having trouble with Canvas.
Live Homework Problem Sessions
Beginning the fourth week of class, we will have live homework problem sessions where
we will discuss the homework assignment from the previous week and additional problems
related to that material (particularly in areas where most students struggled or need additional
practice). We will organize live times based on availability of students. The instructor will hold
one session per week (possibly two sessions in some weeks), lasting approximately 45 minutes
apiece (and sometimes as much as 1.5 hours). Students are required to attend at least seven
different live sessions and will receive grades based on participation in those sessions. If you are
unable to participate in a live homework problem session in a given week, they will be archived
for you to view at your own pace. Also, headsets or access to a microphone (sometimes within
your laptop) are required for this course and will especially useful for these exercises. Additional
information will be provided in the first few weeks about what days the live sessions will be held
and how to access them.
The live sessions are based on the idea of “flipping the classroom,” as students are
expected to read, view lectures, and attempt problems at home, while the live exposure to the
instructor involves going through problems individually as well as in-depth classroom discussion
about the course material. In many ways, this is a more effective use of face time than the old
fashion face-to-face lecture format, where professor-student interaction is limited by the fact that
the professor must spend most of the face time lecturing.
Course Policies
Make-up and extra credit policy: There will be no make-up assignments given. If you have a
foreseeable absence, then please notify your instructor as potential arrangements can be made.
The lowest assignment grade will be dropped. This should buffer against the occasional unusual
circumstance that may cause an unforeseen situation, or just a bad day.
Also, there will be no extra credit assignments. Unhappy with their grades, typically
many students approach me near the end of the semester and ask for an extra credit assignment. I
view extra credit as unfair to those who initially put the time and effort into good grades on the
quizzes and exams. So, my advice to you is this: get your credit while it lasts!
Longwood e-mail and Canvas: You will be required to check your Longwood University email and Canvas on a daily basis (if you do not already do so). I will disseminate course
information using both outlets, including announcements, course content, grades, and (possibly)
class cancellations. If you have any questions or problems about accessing these, please see me
or IT Services.
Academic Dishonesty Policy: Cheating in any form will not be tolerated in the College of
Business and Economics. If the instructor determines that a student has cheated on an
assignment, the grade of “F” may be assigned for the entire course. “Cheating” is the use of
unauthorized resources and/or work of another including but not limited to homework, tests,
papers, presentations and exams. Unless specifically instructed otherwise (e.g. group work),
students are to assume that all coursework is to be the work of the individual student alone. If a
student is unsure as to whether collaboration is permitted, the professor should be contacted in
advance of performing the work.
If you are found guilty of cheating, you will receive an F in the class. You may also have
your name forwarded to the honor board. Please do not put yourself in a position that could
result in these penalties.
Bad Weather Days: If you are unsure if classes will be taught on days/weeks when weather is
especially bad, please e-mail me. With an online course this should not be much of an issue, but
there may be an instance where internet is down due to bad weather. In the unlikely scenario that
you have not heard from me during bad weather periods, then the assumption should be that my
internet is down and I will contact you as soon as I am back online.
Please do not put off doing assignments until the last minute, because you will put
yourself into a situation where bad weather could affect your internet provider and ultimately
your ability to do the assignments. It will be each student’s responsibility to download
homework assignments early (when appropriate) and to identify potential backup internet
providers (like at a local library).
Other policies: Policies not explicitly stated in this syllabus are delegated to the Longwood
University student and faculty handbooks, but are subject to change at the instructor’s discretion.
These policies include, though are not limited to, Longwood’s policies regarding to disability,
plagiarism, attendance, and classroom conduct. The Longwood University Honor Code will be
enforced. A statement of this code can be found in your student handbook. If you are a student
with a disability and you need academic accommodations, please see me and contact the
Learning Center. If you are a student with a disability and you need academic accommodations,
please see me and contact the Learning Center.
Course Outline
*How to read this: each week below lists the topic and reading covered in class that week. Students tend to get the
most out of the lecture when they read the assignment beforehand, which I strongly recommend.
Part I – Micro and Managerial Economics
Week One (Aug. 25-August 31)
Introduction to Managerial Economics, Strategy, and Data
reading:
Managerial Economics – Ch. 1
Thinking Strategically – Introduction
Freakonomics – Introduction
Week Two (Sept. 1-7)
reading:
Microeconomics Review
Managerial Economics – Ch. 8
Week Three (Sept.8-14)
reading:
Economic Decision-Making: Costs & Marginal Analysis I
Managerial Economics – Ch. 2 & 3
Week Four (Sept. 15-21)
reading:
Economic Decision-Making: Costs & Marginal Analysis II
Managerial Economics – Ch. 4 & 5
Week Five (Sept. 22-28)
Pricing, Elasticity, & Economies of Scale
reading:
Managerial Economics – Ch. 6 & 7
Week Six (Sept. 29-Oct. 5)
reading:
Market Structures: from Competition to Monopoly
Managerial Economics – Ch. 9 & 10
Week Seven (Oct. 6-12)
reading:
Alternative Pricing Strategies & Price Discrimination
Managerial Economics – Ch. 12, 13, & 14
Midterm Exam (Oct. 16)
Part II – Game Theory, Business Strategy, and Applied Data Analysis
Week Eight (Oct. 17-26)
reading:
Introduction to Strategy & Game Theory
Managerial Economics – Ch. 15
Thinking Strategically – Ch. 1, 2, & 3
Week Nine (Oct. 27-Nov. 2)
reading:
Game Theory II
Thinking Strategically – Ch. 4, 5, 6
Week Ten (Nov. 3-9)
reading:
Bargaining Strategy
Managerial Economics – Ch. 16
Thinking Strategically – Ch. 11
Week Eleven (Nov. 10-16)
reading:
Statistics, Econometrics and Data Analysis I
Freakonomics – Ch. 1 & 2
Week Twelve (Nov. 17-23)
reading:
Statistics, Econometrics and Data Analysis II
Freakonomics – Ch. 3 & 4 & 5
Week Thirteen (Nov. 24-Nov. 30)
reading:
Statistics, Econometrics and Data Analysis III
Freakonomics – Ch. 6, Epilogue, & Bonus Material
THANKSGIVING BREAK (Nov. 26-28)
Week Fifteen (Dec. 1-7)
reading:
Adverse Selection, Moral Hazard, and Incentive Design
Managerial Economics – Ch. 19, 20, 21
Thinking Strategically – Ch. 12
Final Exam (Dec. 11)